Exclusive: Defecting U.S. brokers bring along $59 billion assets

Thu Jul 5, 2012 2:40pm EDT
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By Ashley Lau

NEW YORK (Reuters) - More than $59 billion in assets switched hands within the U.S. brokerage industry this year, as veteran financial advisers managing large pools of client assets left their firms in the wake of growing frustrations about their parent banks.

Bank of America's Merrill Lynch (BAC.N: Quote) and Morgan Stanley Smith Barney (MS.N: Quote) saw some of the biggest defections, with more than half of those total assets managed by advisers who left those two firms. Wells Fargo and UBS, the other top U.S. brokerages, had more success in retaining top talent, based on moves tracked by Reuters.

"We're seeing bigger teams now making bold moves and moving to another wirehouse or out of the space completely," said Alois Pirker, research director at the Boston-based Aite Group, which studies wealth management trends.

Across the U.S. brokerage industry, at least 26 adviser teams each managing more than $500 million in client assets changed firms in the first six months of 2012. While there is no official record of such moves from prior years, industry experts say the size of the moves in 2012, by client assets managed, have been larger than those historically seen.

Of those teams, seven managed more than $1 billion in client assets - comparable to the size of some entire office branches. Reuters tracks the movement of individual advisers and teams managing about $100 million or more in client assets, which typically equals about $1 million or more in annual production.

Many of those big team departures - and the roughly 280 other teams among those Reuters tracked - were driven by increased concerns over raised account fees, the pressure to cross-sell their bank's products, and worries about the health of their parent companies, according to advisers interviewed about their decision to move.

For some brokers, particularly those at Merrill Lynch, the winding down or ending of payback periods for retention bonuses helped pave the way for some departures.

"It's not necessarily one thing, but one thing that breaks the camel's back," Pirker said, referring to the multitude of factors that can impact an adviser's decision to move.   Continued...